On December 18th, as part of the Omnibus Spending Bill, Congress extended the 30 percent solar incentive tax credit that was due to expire at the end of 2016. The incentive will now run until 2019, followed by a step down to end at 10 percent in 2022. Analysts at GTM Research and the Solar Energy Industries Association have estimated that the tax credit could increase solar installations by 54 percent over the next five years.
According to a study published by the National Renewable Energy Laboratory in October, approximately 32 percent of customers using a cash-purchase approach to solar equipment will achieve a breakeven on the capital investment, which currently sits at a median $2.17/W (not including any state or utility incentives). When examining the loan scenario, the figure jumps to 64 percent.
The largest driver in breakeven prices is local utility rates, although building use is also a significant factor. The building types with the highest breakeven price (and therefore the highest potential cost benefit, according to the study) are small offices, warehouses, and schools. Retail establishments, medium and large offices, quick service restaurants, outpatient medical facilities, and supermarkets all see moderate average breakeven prices, and hotels, hospitals, and full-service restaurants tend to see low breakeven prices.
Incentives and net-metering regulations also play a factor in the breakeven on solar equipment. Given the number of factors driving the cost benefit of such installations, evaluations should be performed on a site-by-site basis to determine the impact of switching to solar.
The extension of this credit for wind and solar companies, combined with falling costs of distributed energy resources (DERs) will continue to keep DERs a hot topic in 2016. Each customer’s energy goals are unique, and warrant their own conversation. Contact ENGIE Insight to determine the most effective energy strategy for your organization.
The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.